VanEck: Bitcoin Miners That Pivoted to AI Are Oversold After October Drop
Bitcoin miners shifted to AI see 35% stock decline in October
Bitcoin mining companies that moved into artificial intelligence (AI) data center infrastructure saw their shares drop by an average of 35% in October. Investment manager VanEck argues that these companies are now "oversold," meaning their stock prices may be lower than their actual business value suggests.
Bitcoin miners are companies that use specialized computers to secure the Bitcoin network, a digital record of transactions, in exchange for rewards. Some of these firms have recently started using their power-connected facilities to support AI technology instead.
Key takeaways from the VanEck report
- Shares of AI-focused miners fell 35% on average during October.
- The sell-off affected companies like Hut 8 and Core Scientific.
- No signed power leases for AI services were canceled during the market drop.
- VanEck believes the stocks are "dislocated" from their actual financial fundamentals.
VanEck claims market drop was driven by contagion fears
In a note released Wednesday, VanEck explained that investors treated different types of companies as a single group. The firm said that fears about debt costs at companies that rent out graphics processing units (GPUs)—chips used for AI—spread to the miners that provide the power infrastructure for those chips.
VanEck refers to these infrastructure miners as "powered shell providers." These firms were also affected by broader economic factors, including a higher-than-expected inflation report in September and uncertainty before the November midterm elections.
Scarcity of power capacity supports miner valuations
The investment manager argued that the physical limit on AI growth is power capacity rather than a lack of demand. Bitcoin miners already control power grid connections, which are difficult and slow to obtain. This creates a "scarcity premium" for the energy capacity these miners hold.
Because these companies have long-term contracts for cash flow and hold valuable power access, VanEck suggests the recent price drop could be an entry point for investors. The firm noted that while some AI companies faced high debt costs, the underlying demand for power infrastructure remains strong.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.
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